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Tesco, iPhone, GiffGaff : How O2's Using MVNOs To Secure Its Future

O2 might have lost the iPhone exclusivity - as expected - but the Telefonica owned mobile phone network is quietly betting part of its business on mobile virtual network operators or MVNOs.

Tesco, which is one of UK's most successful MVNOs and an O2 customer, has already announced that it aiming to launch the iPhone by the end of the year, before Vodafone.

It is likely that O2 has encouraged the supermarket giant to do so in order to divide the market even further; after all, if someone else is to get the iPhone, better be one of its own customers.

Furthermore, since Tesco will be using O2's own network infrastructure, this means a much quicker time to market (less testing and fine tuning for example).

In addition, a significant increase in the number of iPhone users from Tesco will help O2 not only boost its own figures but also using its existing network more efficiently.

Then there's the forthcoming merger of Orange and T-Mobile which might force Virgin Mobile, the biggest MVNO in the world, to look for another strategic partner with only two, O2 and Vodafone fitting the bill.

The latter will be O2's biggest rival in the MVNO segment. Asda Mobile, BT Mobile, Lebara, Talkmobile are all customers of Vodafone while Ikea, Fresh, Vectone Mobile and Virgin Mobile are on T-Mobile's network.

With GiffGaff, O2 is going even further and is essentially offering a white label MVNO, a concept that it might replicate in a bid to encourage organisations with a massive presence (like Matalan or Debenhams perhaps) to offer their own mobile phone network just like they are currently offering their own store cards.

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Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.